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27Jul2015 Market Close: Averages Close Down, DOW Off 128 Points, Nasdaq Down One Percent, WTI Oil Continues To Decline

Written by Gary

Markets closed down with the DOW off triple digits and the Nasdaq off 1 percent on relatively low volume. Last minute trades were from the BTFD crowd hoping for an up session tomorrow, which is possible, but I am not in the betting mood this time around. WTI oil is about to fall into the 46 range while Dr. Copper is sliding further down.

Todays S&P 500 Chart

The steep decline in Chinese stocks is feared my many analysts concerns that cooling growth in the world's No. 2 economy could hurt its key trading partners.

Also concerning are the unstable Chinese stock markets that could easily delay the Federal Reserve's plan to raise U.S. rates in coming months.

The Market in Perspective

Here are the headlines moving the markets.

U.S. Stocks Follow Global Markets Lower

A sharp slump in Chinese markets piled further pressure on stocks after patchy economic data and corporate earnings spurred declines last week.

China Stocks Plunge as Beijing's Bid to Buoy Market Falters

Chinese shares fell 8.5%, their biggest one-day drop in over eight years, wiping out hundreds of billions of dollars of market value and calling into question the effectiveness of Beijing's recent efforts to prop up the market.

Fiat Chrysler could spend billions to buy back unrepaired trucks

DETROIT (Reuters) - Fiat Chrysler Automobiles could pay billions of dollars to buy back defective trucks as part of a settlement with U.S. safety regulators, but has the option to recover costs by reselling vehicles once they are repaired.

Is The Biotech Bull Market Still Intact?

Submitted by Eric Bush via Gavekal Capital blog,

Biogen's $85 (or 22%) drop on Friday has put a spotlight on the biotechnology sub-industry as a whole. And rightfully so, as biotech has been the best performing sub-industry in the United States over the past four years (as always, this data is on an equal-weighted basis). Biogen, which was the third largest biotech stock by market cap before the drop and is now the fifth largest, has generally been a stock market leader. Whenever leadership begins to turnover that is usually an important signal for the market. So has biotech run its course?

Top 5 Sub-Industries Over The Past Four Years

image

Let's take a look at the other five largest biotech stocks (there are 17 total biotech stocks in the GKCI US Biotech Sub-Industry), to see how any market cap weighted biotech index may perform in the near future.

The two largest biotech stocks by market cap are Gilead Sciences and Amgen. Gilead just poked out to new highs after trading in a tight trading range for most of the past year. While it is always positive for a stock to be making new highs, given the extended run that Gilead has been on its a bit concerning to see the stock not exploding higher to new highs. The longer the run for a stock the more momentum it needs to continue to keep powering ahead.

Amgen's chart looks a lot like Gilead's except that its been a slightly less volatile stock and hasn't had quite as strong of a bull move. Amgen has been stuck in a sideways pattern for abou ...

Syngenta says Monsanto's $2 billion break-up fee comes with caveat

FRANKFURT (Reuters) - Syngenta has said a $2 billion break-up fee that unwanted U.S. suitor Monsanto has pledged to pay if its proposed $45 billion merger failed would only apply in limited cases, leaving its shareholders exposed to the bulk of regulatory risks.

Knife-Catching Hedge Fund Oil Bulls Dump Crude At Fastest Pace In 3 Years

Hedge Funds' net long position in WTI Crude collapsed 27% (the biggest single 'dump' in over 3 years) ahead of the big plunge last week (and is now down almost 60% in the last month - the most since 2010). Part of a broader deflationary collapse in commodities, as Bloomberg reports, long positions dropped to a two-year low while short holdings climbed 25%, erasing more than $100 billion in market value from the 61 companies in the Bloomberg E&P stock index. With crude supplies still almost 100 million barrels above the five-year average, "there's a lot more room for prices to slide," warned one trader, "it's going to take a long time for this to work itself out."

Speculators' conviction that oil will rally weakened at the fastest pace in three years, just before futures tumbled into a bear market.

As Bloomberg details, the net-long position in West Texas Intermediate contracted 28 percent in the seven days ended July 21, U.S. Commodity Futures Trading Commission data show. Long positions dropped to a two-year low while short holdings climbed 25 percent.

Hedge Funds dumped their spec longs en masse...

Alstom shells out again to keep GE deal on track

PARIS (Reuters) - Alstom is to accept 300 million euros ($333 million) less than previously agreed for its power turbines unit from General Electric as a contribution to the U.S.-based buyer's efforts to win antitrust clearance in Europe.

Strong Dollar Discourages Many Foreign Homebuyers In The US

by CoreLogic

Home sales in the U.S. during the first four months of 2015 have been the best in eight years. Relative to the same period one year ago, sales jumped 9 percent, helped by a drop in fixed mortgage rates of almost one-half a percentage point. However, one group of homebuyers has backed off over the past year: foreign buyers.

American Automakers High Exposure In China Is Not Good; Here's Why

Via BidnessEtcNews.com,

The Chinese stock market crash has hit the world's largest auto-market hard; BidnessEtc explores the terrain and evaluates the damage to players in the 'game'

Between June 12 and July 9, China's Shanghai Index fell 32% after rising 150% between June 2014 and early June of this year. In recent days, at the behest of the government, large investors have stopped selling their stock, which explains the market's current stability.

Although the stock market plunge badly hit investors, it has also hit China's automobile market, currently the world's largest.

Automobile Sales In Asia-Pacific Region Decline As The Shanghai Index Plummets

Sales were already falling. The above chart illustrates automobile sales in the Asia-Pacific region over the past 12 years. Regional sales nose-dived between January 2014 and January this year. June's sales retreat amounted to 3.20% year on year (YoY).

General Motors Bankruptcy - A Case In Point

Notoriously, Detroit, MI's General ...

Teva to buy Allergan generic business for $40.5 billion, drops Mylan bid

TEL AVIV (Reuters) - Israel's Teva Pharmaceutical Industries will pay $40.5 billion in cash and stock for Allergan's generic drugs business, solidifying Teva's position as the world's No. 1 maker of generics while freeing Allergan to focus on branded drugs, paying down debt and potential "transformational" acquisitions.

Mitsubishi Motors production hubs will be Japan, SE Asia, Russia

TOKYO (Reuters) - The president of Mitsubishi Motors Corp said Japan, Southeast Asia and Russia will become the automaker's principal production hubs after it quits making cars in the United States later this year because of dwindling sales there.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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